Borrowing Trouble

Before incurring onerous debt likely to plague your bottom line
for years, askyourself if getting that loan is really necessary.
Could you start your newbusiness with personal savings? Would
liberal credit terms from vendors helpcarry your existing business
through downturns? Might improved cash flow beenough to fund
expansion?

Fact is, most small businesses are funded by savings, leaving
owners with noloan repayments, no partners, no one to share profits
with and no exorbitantinterest to pay. But if you absolutely must
look elsewhere, ask friends andrelatives to help with start-up
capital. Or investigate borrowing against yourretirement plan (if
you're currently employed), stock-market
holdings,life-insurance policy, certificates of deposit or home.
(Be aware that ahome-equity loan is risky; in a worst-case
scenario, you could lose yourhouse.) Other options:

Economize. Slash start-up expenses to meet available
funds. Forgo movinginto an office or buying new equipment. Use your
existing vehicle, furnitureand supplies. Need tools or materials?
Buy used or lease.

Conduct business from home. If you must have an outside
location,negotiate for lower rent and leasehold improvements.

Need professional services? Look into trade-outs or time
payments.

Do you buy from outside vendors? Arrange in advance for
volume discountsand just-in-time (JIT) delivery. JIT reduces
inventory and the need for storagespace--plus, you don't have
to pay for materials until they're delivered.

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